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Reforms in Health-Care Costs Ready

Both employees and employers will have to pay more next month under a unified medical security fund as Shanghai moves ahead with health-care cost reform.

Without revealing the exact range of the hikes, city officials promise that the new policy will benefit not only the city’s 7.3 million employees and retirees but also the state-owned enterprises that are struggling financially.

Speaking at a working conference on medical system reforms over the weekend, Mayor Xu Kuangdi said the new policy is designed to ensure the fair sharing of medical costs and establish a new basic medical security mechanism, which combines a citywide fund with individual accounts.

Before 1996 when the city first began medical-system reforms on a trial basis, employers had to cover all the health-care costs for their employees. Today, most workers pay 10 percent of their medical expenses while their employers are responsible for the remaining 90 percent.

With the country’s rapidly developing economic reforms, some state-owned enterprises have failed to become profitable. As a result, they had difficulty paying medical bills, sometimes forcing workers to wait one to five years for reimbursement.

Also under the old system, one employee in a small company requiring a major operation could drain the firm’s total medical budget and push a poorly performing enterprise deeper into debt.

The mayor said the new policy will address these problems as the unified medical security fund and the individual employee accounts will guarantee that bills will be paid on time.

Both employees and employers will have to contribute more than they now do, however.

Under the new plan, employees and retirees will be divided into three groups according to their work years and retirement duration, and each group will pay a different percentage of their monthly salary to the city’s basic medical security fund.

As a result, those with longer working years will have a larger personal account.

The system will not pay for medical treatments resulting from cases involving suicide attempts, self-mutilation, fights, drug abuse and traffic accidents.

Without elaboration, the mayor said that the new policy will offer preferential treatment and financial aid to retired and low-income workers to cover their medical costs.

The new medical care policy will begin trial operation next week in the electronic-device production sector.

“Electronic-product makers have a large number of old and retired employees,” said an official with the city’s Information Office. “If the system works there, it will be easy to carry it out in other sectors.”

The policy will be broadened to the full business sector on December 1. It will kick in for government and public institutions on March 1.

“The reform of the medical care system is very important as it affects not only people’s individual interests but social stability and the city’s development,” said Xu.

The mayor called on all government departments, enterprises and other work units to establish special working groups to take responsibility for introducing the new cost-sharing policy.

(eastday.com 11/15/2000)

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